Tariff Impact

will need to pay that tariff. As a result, many customers and dealers are delaying or cancelling orders until there is a resolution regarding tariffs.

Adding even 10 % to the cost of any crane or heavy haul equipment can range from $ 100,000 to $ 500,000 or more. This will have a major cash-flow effect because customers may need to pay the tariff out of pocket, or if the bank or lender agrees to finance the tariff it could significantly increase their monthly loan payments. In some cases, the tariff cost is like adding a piece of equipment to your fleet without gaining any revenue or income advantage.

One may think initially that domestic crane and equipment manufacturers may benefit from tariffs because they may be able to keep their prices lower while foreign rivals need to add tariffs to the cost of their goods. However, domestic manufacturers may need to import components or import materials for components, which initially will be cumbersome to price.

For example, what percentage of the components have tariffs, and can they be

absorbed by the manufacturer or by the customer? In the end, this could reduce the cost savings of purchasing a unit from a domestic manufacturer.

The cost of domestically sourced used equipment may initially get a value boost from tariffs. This, in turn, may enable funding sources to accept higher values to be financed and / or advanced at 100 % of the new value over time.

However, while customers may try to purchase equipment that is already located in the U. S. to avoid tariff costs, we also may see a surge in pricing due to supply and demand. If minimal equipment is being imported it will create high demand for equipment that is here, and as a result will increase prices due to limited supply.

The uncertainty with tariffs is also causing project delays and reduced capital investment until there is more clarity. Small to mid-sized contractors may not have as much financial flexibility as large firms and are particularly vulnerable. As a result, it may prohibit some companies from adding equipment to their fleet.

As an alternative, they may extend the lifespan of older machinery, which is generally known to raise maintenance and repair costs or decide to rent. While renting can be a great option, if there is minimal capital investment by crane and heavy equipment rental companies, there may be a lack of equipment in the market. Under this scenario, bare rentals can become more expensive, which can affect cash flow and job profitability.

For now, the best approach for manufacturers and lending institutions, and especially buyers, is to prepare a plan to move forward with their acquisitions, because once there is clarity about tariffs the equipment market may become extremely active through next year.

Harry Fry is the president of Harry Fry & Associates, a heavy equipment financing provider dedicated to the crane and lift industry. Founded in 1995, the company has provided crane manufacturers, distributors, and end-users with finance and lease programs from $ 50,000 to several million dollars.

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